The Militarization of Human Resources

How is it possible that some companies’ human resources departments can act with such indifference that they actually behave in a manner that is inhumane and unresourceful?

In some circles and industries, an increasing trend is taking hold where recruiting departments have resorted to crafting lengthy recruiting contracts issued by newly centralized recruiting departments. In these examples, the departments have gone well beyond centralization and have engaged in a practice and approach best described as militarization.

Before I go on, let me state that I thoroughly understand the need to consolidate recruiting activity, as well as monitor recruiting expenses and costs from one single, centralized function. This is especially true when such companies are no longer medium-sized and have joined the ranks of the Fortune 500 and particularly publicly traded companies that operate under the watchful eye of multiple government agencies.

But when reading the language and clauses of “recruiting agreements” put forth by these emboldened “militarized” recruiting departments, one is left to question the real intentions of such an agreement.

Is it to promote recruiting partnerships? Or, are these contracts being created to confound the search firm from recruiting at all? More of these militarized recruiting agreements seem to point to the latter.

Some of the “recruiting vendor contracts” that have become a by-product of the overall centralization/militarization efforts indicate that the company would actually prefer if you (the external recruiter) fail at delivering candidates rather than succeed in filling openings!

My law classes remind me that bilateral contracts require several key components, which include the following:

  • Lack of duress (both physical and economic).
  • Both parties are of legal age.
  • The contract consisting of lawful activity (you can’t contract a hit man, for example).
  • Consideration exchanged for service/goods provided (this consummates the contract).
  • Absence of being overly one-sided.
  • Good faith/intentions (varying implications depending on industries/types of contracts).

If you sign a contract under duress (e.g., “sign or some harm will come to you!”), that could invalidate the contract. Such harm can be physical or economic.

I know something about economic duress, as I used the economic-duress defense 15 years ago to win a dispute against a New Jersey company that settled out of court in our favor after a judge let it be known which way things were heading.

Deciphering Confusing Terms

Some of these contracts contain baffling phrasing involving non-solicitation clauses; fines for reverse recruiting; are overly heavy-handed, possess lengthy non-compete periods; and impose severe restrictions on communication with management. Some contain clauses that extend too-great authority to the client company with regard to duplicate candidate submissions.

A few creative, clever companies got around point No. 4 by taking the contract wording one step further. Since you can not hold a recruiting firm liable for reverse recruiting under a contract with no business transaction or compensation ? one clause I reviewed for this article demanded that the search firm pay a $10 “consideration” fee in order to become an approved vendor. Now that took some big Chicken McNuggets on the company’s side to put into wording.

To put this into perspective, could you imagine demanding that your landscaping contractor pay you $10 before he could set foot on your property for the privilege of submitting a price quote for a new patio?

Where in this country would you find a contractor or any business professional worth a dime (licensed/bonded/insured/with references) who would pay you for the privilege of providing a quote? The good ones I know will charge me, the homeowner, $350 just for an initial site design (equivalent to being paid to produce a recruiting plan in our industry).

Our recruiting industry takes such abuse on the chin and seems to enjoy the punishment, which no other similar service industry would ever tolerate. When I try to draw parallels with service-based professionals working on a fee/contingency basis, I come up with this list as one example:

  • Travel agents.
  • Contingency lawyers.
  • Real estate sales professionals.
  • Insurance producers/sales reps.

Off this short list, I find contingency lawyers and real estate professionals are the closest cousins to the search industry. No attorney would work on your case on contingency, knowing you are “cheating” while using two other attorneys. That would create chaos if the case went to court. Same goes for competent real-estate marketers.

Now let’s look at the real estate industry for a moment. Realtors have to be trained like recruiters. They have to be licensed like recruiters (in most states). They can go on to acquire additional certifications, like recruiters.

Stop and imagine a Realtor entering into a home marketing agreement and then letting you sign two or three other Realtor listing agreements simultaneously. Would that happen?

Absolutely not!

No Realtor would put up with the idea of your using multiple realtors while they invested thousands of dollars of their own monies to bankroll marketing, advertising, attending/hosting open houses, posting Internet features, etc. to drive traffic to your home.

Yet our search industry puts up with this daily. We allow a client to sign a contract. And just as we begin work, that same client is probably racing to get two or three more recruiters involved on the same “search party” simultaneously!

It’s a disgrace to both the companies and recruiters that engage in this type of charade.

We get what we deserve. We treat ourselves cheaply and as a dispensable commodity, and we are now getting the treatment we’ve come to ask for from militarized recruiting departments forced to close the gaps for those in our industry who do not engage in self-regulation and self-discipline.

Some of these agreements are getting too ridiculous and insulting to our profession. Too many militarized recruiting agreements reek of false pretenses that have nothing to do with establishing a recruiting protocol.

From Contract Confusion to Contract Reality

While many centralized agreements are honorable and prepared with good-faith intentions, a number of agreements are apparently designed to create the illusion that recruiting alliances would continue with chosen search partners.

However, these agreements instead seem to place greater value on other concessions buried within the contract.

So what is it these companies are after if it is not recruiting services?

Why use these agreements if they truly never intend on using your services, or plan to issue searches under impossible constraints?

I spoke with employment specialist attorneys around the country on this subject, as well as several national recruiting trainers and speaking gurus I consider esteemed colleagues and reliable sources. The consensus was unanimous that a growing number of “newly revised” militarized recruiting contracts written by battalions of in-house lawyers are dubious in nature. Although I am not an attorney (please consult your attorney for all contract-related questions), I find that the real hidden value contained in these contracts include:

  • Non-employee solicitation clauses. This is probably the most valuable benefit the company might derive from an otherwise useless contract.
  • Non-communication clauses. If communication is restricted to the appointed recruiter, he or she can stonewall all day about job-search status and you will never know better.
  • Illusion. The “illusion” of continuing a recruiting relationship to invoke the above two clauses.
  • Fear. If they can intimidate you into believing there is hope you will not raid their company.

Actual Contract Language Revealed

Consider some of these real-world examples:

“? No communication or dialogue is to occur with any hiring manager ?”

Article Continues Below

Funny.

If it were not for the hiring manager’s knowledge of the search firm’s abilities, human resources would never have known of the firm to begin with. I can count on one hand when human resources actually reached out to any recruiter without being cattle-prodded by management.

If you do not trust the search firm, do not hire them. If you trust them, let them do their job, which is to fill your company’s positions. This process requires constant communication with decision-makers and not middle-person interpreters, translators, or revisionists. If you must stay in the loop, then participate in conference calls.

” … Payment in the amount equal to one-year’s salary is required for any recruitment of company’s existing employees ?”

In this case the “fine” for reverse recruiting (poaching) would be the value of the recruited candidate’s first-year salary. You can’t blame the company, as case laws around the United States have favored search firms when poaching did take place while the said search firm was attempting to place a candidate with the simultaneously poached client.

Some of this raises more issues, such as who is a client, and how long is a client considered a client after no activity? At IRES, we abide by NAPS ethics and guidelines in the absence of a client-specified statement on client status. That period is one year.

One recruiting representative of a financial-services firm based in the Northeast stated:

” … I don’t care what vice presidents may be in charge of. Regardless of the title on the business card, I’m in charge of determining who interviews which candidate and which location gets to interview. I run this company, not our VPs; they just think they do …”

That person was a low-level recruiter earning in the mid-fifties range yet felt he exerted more authority than vice presidents. Ouch!

This is an example of militarized recruiting. I forwarded this email to the actual VP, who was astonished to discover the manner his centralized recruiter used when speaking to other business partners.

Here’s another:

” ? In the event of multiple resume submissions, the company shall make the sole and final determination as to which recruiting vendor has earned the fee ?”

Very endearing language, isn’t it? And here I thought as president of my search firm that such decisions rested upon my shoulders.

Final Thoughts

The only time a company needs more than one recruiter is when the first engaged recruiter turns out to be incompetent. Period.

The company is setting itself up for failure when you invite search-party tactics.

If you are using five recruiters, they must all stink or you wouldn’t need so many. Either that, or your company stinks and you have an impossible position to fill.

The companies we have the greatest consistent success with and have decades of ongoing relationships with are those that allow us to work as the experienced, competent, professionals we are. The successful companies allow us to interact harmoniously with decision-making managers whereby executive recruiting consultants and internal recruiting are all being treated as equals.

There is no animosity. No tension. No hidden agenda. And no struggle for the protection of internal fiefdoms or job-security juxtapositioning by internal HR.

Many newly formed centralized recruiting departments were designed quite well and avoid the troublesome issues outlined in this article. Most permit necessary management dialogues necessary to perform a quality professional service.

To be fair, not all centralized recruiting departments micro-manage, exhibit insecurities, or constrict the ability to perform the very recruiting services that were requested. This is, after all, the way it should be for any professional to deliver professional results.

The next time you are confronted with a newly militarized human resource contract, consider it more carefully and read between the lines to find the true hidden meaning before you sign. Consider the repercussions to your industry and whether your value and integrity is worth compromising to corporate arm-twisting.

President of iresinc.com & Searchwizardry.com Within two years after leaving the corporate world in 1987, Frank Risalvato was earning $21,000 average fees as a search consultant. Each individual fee equated to almost 50% of his previous annual salary in 1987. In 1991 he founded www.iresinc.com, the search firm he continues to operate today. Today his fees are more than double that of his earlier years while working fewer hours weekly. Frank's audio download page on www.searchwizardry.com provides an opportunity to "be a fly on the wall" and listen in to live calls, messages, conversations with clients and candidates. His recent book, A Manager's Guide to Maximizing Search Firm Success has helped recruiters using it lock up partial and full retainers between $5,000 to $45,000 by helping drive home the concept of exclusive/retained over the usual contingency approach.

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18 Comments on “The Militarization of Human Resources

  1. This is one of the best article I have read on ERE on quite a long time.

    The issue is ‘clients’ with unreasonable or unconscionable contracts for TPRs – what it means, why it happns, etc. Frank looks at the issue from several angles and perspectives. Very insightful.

    Frank, you note the similarities between lawyers, real estate people and recruiters in that all 3 work on contingency and it is our profession that does not seem to have the level of self respect needed to reject lopsided terms.

    I believe the reason for this is the barriers to enter those fields. While there are a lot of lawyers, you at least have to pass the bar and most of them actually went to law school. Real Estate people have to take classes and tests but recruiters in most areas do not need any kind of license or education to call themselves a recruiter.

    Consequentially, there are a lot of people in our business who do not know or care about the ethics and professional practices that most of us here subscribe to. These people are out there taking almost any agreement they can get and many will work under almost any circumstances.

    While it is actually not that hard to differentiate yourself, these people put pressure on fees and terms and distort the value proposition that professional recruiters offer.

    Great article!

  2. Very interesting analogy with real estate agents and recruiters; and you are right. Sometimes the only way we can get an ‘exclusive’ is to be retained. Is there no loyalty out there anymore?

  3. Frank,
    I do not disagree with the points you are making, but as a Vietnam Viet–30+ year HR pro, I must express my disappointment in your characterization as being military.
    In today’s environment the military suffers enough, please do not add to that burden.

    Good article, poor choice of title.

  4. Just a quick comment to ensure that we separate how ‘militarized’ appears to be used in this piece (in a somewhat pejorative way) and the positive perception that ‘military’ has in Corporate America. Also, it probably makes sense to clarify that ‘militarized’ does not equal ?centralized?.

    Our company is the largest privately-held placement firm specializing in military-experienced talent. I’m confident in asserting our clients certainly do not see ‘military’ as a pejorative in relation to Corporate America. As a matter of fact, military-experienced candidates are some of the top performers in our clients? companies based on the candidates? unique mix of academic achievement, leadership abilities, team-focused management style and communication acumen.

    In addition, the military is actually a decentralized structure. Our servicemen and women are taught to make decisions in the field, to be creative in solving the problem in front of them. They aren?t taught and can?t afford to consult a central structure on every move they make. This is one reason that military-experienced candidates are so effective in Corporate America. They are trained to bring solutions, make decisions and be accountable.

  5. Frank,
    Usually I take a breath before I comment on any articles but this one came at exactly the right time. I believe this is so true and after 18 years of successful recruiting, I find now more than ever, I am inspired daily to retire.
    Trust in a any relationship takes time, but the pre-nuptual agreement can certainly stifle it from the start.
    Communication is key and if all parties are on the same team, recruiting can be a beautiful thing.
    Thanks for the article.
    Beth Simminger

  6. Frank,
    Thanks for your in-depth and informative article.
    My only concern (like Walter’s) is the use of the word ‘militarization’. As I read the title and then the body I kept wondering what was the connection to ‘militarization’? Were you inferring in your first paragraph that militarization meant ‘indifference’, ‘inhumane’ and ‘inresourceful’? To me that is quite a stretch and isn?t what comes into my mind or found in the dictionary. I kept reading the article, hoping for a detailed explanation of the term ‘militarization’ as you did (skillfully) with the many other terms used. Kind of odd, that an earlier commenter titled her comment ‘Military Recruiting’. Wow – possibly a simple error or indication of the increasing number of Americans who are becoming illiterate about the military, its mission, its people and its value.

  7. The article and comments make some good points. The problem, as David has pointed out, is the lack of consistent professional standards in the recruiting industry. While it would be nice to compare recruiters to attorneys or real estate agents, maybe car salesmen is the more universally accepted analogy.

    Having worked both sides of the desk, I can tell you the restrictive contracts you are seeing were created following a company’s bad experience with a search firm or recruiter. It is unfortunate, but the good ones pay the price for the others who don’t care about ethics and professional business practices.

  8. Frank,
    I think there is another big difference you are missing in your comparison to Real Estate Agents. Although you do list exclusively with an agent, that listing is open to any and every other agent. They have full freedom to bring their clients through and bid on my house. So even though the listing is ‘exclusive’ it is not restricted to that agent and his/her clients only. Recruiters do at times agree to work with other recruiters but it is not an industry wide practice like that of Realtors. There is definitely a big difference there.

  9. I think Militarization is the perfect word.

    It reflects an organization that is focused on threats, the balance of power and preparation that are necessary to survive what is perceives as danger.

    This is essentially the opposite mindset of the company that wants to partner with good firms that can add value while earning their fees.

    Bill Scott is right about decentralized command in the US military – for more information, Google ‘Auftragstaktik’. One of my favorite military subjects.

  10. Michael – I disagree and hold firm that the professional Real Estate analogy, as well as contingency or retained lawyers/attorneys … offers a valid comparison.

    Regardless of the fact that once a house is listed on MLS and yes, open to buyer’s realtors representing only buyers, they must still divide the resulting fee with the LISTING REALTOR.

    And while retained and contingency search firms COULD subcontract a search out to a sourcer and first phase recruiter (as I do) I similarly must divide the fee but STILL POSSESS accountability over the process.

    Therefore, regardless of how many dozens or hundreds of prospective families or buyers parade through the house over the next 3-6 months, the listing agent knows his firm will earn a minimum of 3% (average) or 1/2 the net 6% commission in exchange for his/her efforts.

    WITHOUT PROPER MARKETING THEIR WILL BE NO PARADE AND NO COOPERATION FROM BUYER’S AGENTS! There’s a reason why you don’t hear of Foxton Realty any more, their model was flawed and many full commissioned realtors would NOT TELL BUYERS of any discount FOXTON property as it was not worth their time.

    I have some modest real estate holdings around the country myself and am very, very familiar with this industry. I’ve also cultivated good friends that are multi-million dollar realtors.

    In my case I have specific geographic locations and cities I purchase real estate in where I will use ONE and ONLY ONE REALTOR because I have cultivated that level of a relationship.

    One such realtor who happens to be in New Mexico knows the following:
    a. I pay cash and always promptly on
    the specific date/minute I’m supposed
    to.
    b. I never ‘loose the invoice’
    c. I’m good for the funds
    d. I work with him exclusively (even though we have no written contract requiring such)
    e. Am always accomodating within reason when it comes to counteroffers or seller’s last minute ammendments or revisions.

    In return I receive:
    a. Immediate notifications (within
    minutes) of any properties hitting the market below value.
    b. Immediate notification of good deals BEFORE THEY MAKE IT TO THE MLS.
    c. Am given an ‘inside track’ few others have due to their lack of loyalty.

    So you see, there are many reasons for me why it pays to be loyal.

    When I visit a certain Southwest region as I do each year, I’m given 4X4 off road tours of my property holdings (which happen to be on the edge of one of the Southwest’s fastest growing metopolis and in the path of rapid development) and am known by the president of that particular Coldwell Banker office.

    I get royal treatment, access to the executives refrigerator for snacks/drinks, etc. and taken out to dinner as I’m one of their ‘loyal’ and ‘steady’ customers.

    The analogy with recruiting is DEAD ON on each AND EVERY POINT.

    When clients prove they are loyal in recruiting, I reward them in ways they can never understand at first until we are given a chance. I have even helped clients ‘RE HIRE’ candidates that formerly resigned (with no second fee) and provided numerous other invaluable services that have helped with retention issues worth millions to them.

    But we do this only when the loyalty and relationship is bilateral and justifies such.

    I can give an entire afternoon seminar on the hidden values of loyalty.

  11. For those that read too much into my use of the term ‘militarization’ rest assured there was nothing derogatory whatsoever intended.

    What I did intend by using this term was picked up on by David Reese’ explanation:

    That is I used the term ‘militarized’ as in: Building defensive barriers. Fortification. Creating something impenetrable as in a fortress or rampart.

    When ever any department in any organization ‘fortifies’ itself against other internal departments it must work with … this is the first sign of organizational ‘cancer’.

    Remember: ‘Organization’ is derived from the root word organ. When cancer attacks any organ it attaches itself to it threatens the life of the entire organism.

    I used ‘militarized’ because it best described the aberrant run-amok behavior of certain staffing functions that have placed departmental survival over and above the well-being of the entire organization.

    Hope that explains that. Now let’s see if someone reads more into my explanation!!

    Visit http://www.searchwizardry.com
    Frank G. Risalvato, CPC

  12. In reading over this article and all the responses, I just wanted to briefly interject that there is no need for an article with extremely valid points to divide certain readers on the basis of the term ‘militarization’. I know I’ve used words in the past (and still today) that create an incorrect perception in readers’ minds, meaning things can sometimes be taken out of context. In fact, I said a couple things on the Recruiting Animal Party show the other day that could be taken out of context, too. When people are looking for an opening to hit you with a jab, they’ll find one . . . especially when it’s one-sided communication like a discussion board.

    Coming from a former Devil Dog, I think Frank deserves a pass here. Let’s all take a deep breath and relax 🙂 I would have recommended a different word in light of our current foreign policy, but look, nobody is perfect and his points are highly valid despite a single word that has a higher probability of offending due to our current political state.

    Like many of you, I work a full lifecycle desk every day (in addition to growing another service offering), and the truth of the matter is that HR & Internal Recruitment often create inefficiencies that hurt their organization’s overall performance while ‘helping’ them complete their individual duties.

    You know, we can point fingers at the individual players (the HR admins, Recruiters, etc.), but at the end of the day, they’re trying to do their jobs the way they believe they’re expected to. Therefore, I blame the leadership. It’s the leaders that see problems and inefficiencies laid out before them, but they do nothing to fix them. Why? Because they fear they might be out of a job as well if they ‘disrupt’ the natural order of things! (status quo).

    P.S. Let me briefly throw out there that yesterday’s command-and-control highly hiearchial military structure has been rendered more ‘innefective’ than less with the expanding threat of Global Terrorism. There are efforts to shift away, but it’s not easy to go from a Matrix 1 to Matrix 4 blueprint overnight. (Our SpecOps, for example, are a great Matrix 4 model . . . but we’re talking small teams versus high-volume infantry). The lesson for Talent Acquisition is to roll out an incremental program – get some successes with a team or two, and then scale out as you massage out kinks and learn from any previous mistakes.

  13. Frank,
    I understand the fees involved and that actually goes to prove my point even further. The listing Real Estate firm is guaranteed 3% commission. The reason being is because it makes the listing accessible to every licensed Realtor. The Realtor you list with might not make the sale but your property will get sold. The real estate industry maximizes its resources by allowing any and every agent to have immediate access to a listing. They don?t take the order, work on it on their own for a few weeks then if they don?t progress open it up to other agents. In the recruiting field, as you stated, you CHOSE whether or not you subcontract out positions. And on top of that, you CHOSE which firms you would like to work with. From a corporate point of view, that is not maximizing resources. Realtors do not choose. They post a listing and it is immediately accessible to EVERYONE.

    Having experience in real estate yourself, you should know the obvious differences between the two industries. You own several properties so I?m sure you have seen several listings over time. Some of those listings may have been from your agent, some may have been from a different agent. If all the properties you bought were also listed by your agent then that?s awesome, but not commonplace. I also happen to have a real estate agent who I am loyal to and have bought several properties from. Some have been his listings and some have been other agency listings. The main point is my agent doesn?t always have the perfect listing for me. He knows my tastes and interests and he knows that his listings alone might not be the perfect fit. I am loyal to my agent because he has access to EVERY property that is listed and he offers that access to me. He will happily show me properties listed by Century 21 or Weichert, or Coldwell. If I post a position with you and no one else, I have no access to any other candidates but yours. And just like my Realtor, you might not have the perfect candidate, someone else might. How can you honestly state that a single recruiter or even an entire firm can provide resources like those provided in real estate? Of course you can say there are good recruiters and bad recruiters, good realtors and bad realtors. That?s a given. But if you look at the underlying structure, the real estate model maximizes resources in a way the recruiting industry doesn?t. THAT is the reason many companies list with several recruiting agencies.

    When my company has a need, I find the best possible talent, utilizing ALL my resources, whether it?s using one agency, five agencies or NO agencies. I have very good relationships with several different recruiting firms. They all know my needs and have all been successful at different times. We have a very professional relationship and work very well together. Just because I do not place all my eggs in one basket does not mean I do not know the meaning of loyalty. I understand the loyalty factor and I am extremely loyal to the different vendors I work with but when it comes down to it, my loyalty lies where it should?with my company.

  14. Michael – Yes there are differences. But not quite as you portray them.

    None of your arguing points change the simple fact NO REALTOR will ever market a house without an exclusive.

    Period.
    End of paragraph.
    End of chapter.

    They will want a SIX or TWELVE month exclusive in most cases.

    And ‘NO’ You still do NOT HAVE ACCESS to ‘every buyer’ just because of the MLS as each Realtor
    pulls in a different audience based on their marketing capability and internet skill.

    I know of realtors that are internet IGNORANT and unable to draw buyers while others are HIGHLY KNOWLEDGEDABLE in internet traffic and can sell the house in 5 weeks DESPITE BOTH BEING ON THE SAME MLS!!

    Just like YOU WILL NOT FIND every qualified candidate just from listing your ad on MONSTER. There are many that will read the MLS and pass for scores of reasons ranging from bad description, lousy photo, lack of features, etc. etc. etc.

    You can give your job order to multiple recruiters if you wish, but anyone worth a tablespoon of salt in the recruiting profession will throw that search into the SHREDDER (or hit the delete job order button) as soon as they find out the same candidates are being contacted by other firms.

    There are hundreds of thousands of companies I can carefully pick and chose whom I wish to conduct business with. The choices of ‘clientele’ are LIMITLESS and new companies are being created as I type this … I chose only those relationships that will make best use of our resources and time/effort.

    I reject 90% of the search requests that come into our office EACH and EVERY WEEK because I TIRE and become exhausted of having to educate, teach, and preach on the subject of proper business etiquette and what used to be 5th grade common sense, (which is very uncommon these days.

    For this reason, we no longer accept contingency searches and stopped doing so years ago (unless they are accompanied by an engagement fee up front). I discovered after years in the industry the very nature of ‘contingency’ relegated us to substandard lousy business relationships.

    Someone else made this comment to me on this forum:

    ‘our recruiters are doing nothing but racing to the same job boards to get the same candidates to us we can get on our own…’

    This is not a problem with the recruiter necessarily but the company. If you can ‘get them on our own’ then why are you using recruiters?

    1. Maybe their search is so generic and low level they should be using job boards and NOT giving it out to recruiters! It depends on the nature of the search – some don’t justify direct recruiting because the net can be so wide.

    2. If you have the resources for posting job ads and your company is large enough to manage the internet based advertising aspect … and such is delivering results, why bother with recruiters?

    3. There are MANY small to MEDIUM sized companies (and large ones) that DO NOT have such resources or might have the resources but don’t want to bother with it and VALUE a recruiter’s input REGARDLESS of the source, method
    or technique whether direct contact or research/internet derived.

    Chances are that most companies that whine and complain and lament that their ‘recruiters are just racing to the job boards’ don’t have a clear, crisp, well designed plan defining when/where recruiters should be incorporated into the process in the first place.

    The companies THEMSELVES are CREATING THE PROBLEM!

    (*See my ‘Maximizing Search Firm Success’ booklet on http://www.searchwizardry.com – it covers this entire subject in depth)

    I have found most sloppy practices pertaining to recruiter usage have been inherited from ‘the former manager’ in the 1980’s who inherited that way of working from her ‘former manager’ in the 1970’s. Hence – it’s always been done ‘that way’at ‘Their company’ which apparently continues to make it ‘the right way’ in 2008!

    If you DO use a recruiter for Pete’s Sake LET THEM do the job and stop duplicating their effort.

    When I hire a house cleaning lady I don’t go around the house vacuuming behind her just so I can shave an hour off her billed out time.

    That would be Ridiculous.
    She’d never come back to my house again.

  15. Thank.

    You.

    Frank.

    You have just articulated, far better than I could have, why, after awhile in this business, I:

    1) Opened my own firm,so that I could…

    2) Refuse contingency searches outright (I spent the late 70’s through the early 90’s making a decent living as a contingency recruiter, so this is not my arugula moment here), and…

    3) Build a nice little practice around the needs of a handful of no-name mid-cap manufacturers, for all the reasons you mention and one more: None of these fast-growing, profitable outfits waste their money on an internal recruiting department led by someone with a hyphenated last name and staffed with strutting, flailing wannabes who wouldn’t last a month in your shop, or mine.

    See you in Vegas, baby.

  16. Frank,

    I just read your article and I have to tell you, you missed a few points. I worked in contingent and retained search for 10 years before moving over to the in house side. While some of the restrictive clauses in the contracts you describe seem extreme, the use of contracts by corporations is driven by a few trends.

    1. Centralized data warehouses that allow enterprise wide analysis of all areas of spending including search.
    2. Corporations have all professional services engagements negotiated by purchasing and use the corporation’s contract so they know exactly what the terms are.
    3. Technology like Taleo and Vurv that have vendor management portals and typically require a base line evaluation of who preferred vendors will be.
    4. The behaviour of those few bad apples who get into recruiting and recruit from there clients or put unreasonable clauses into their own engagement letters. One I reviewed the other tried to claim a fee in the instance that a candidate they placed with us referred anyone to our employee referral plan!

    Successful recruiting arrangements are about partnership. Now that we use a more centralized approach to recruiting the search firms we engage can be assured that the assignments they take on are approved ie.the hiring manager has authority to recruit.

    I think the use of contracts and technology to manage recruiting vendors of all levels will continue because large and small companies alike have realized such benefits from their implementation.

  17. John –

    Your very first statement includes wording that
    reveals the most common and critical flaw in the thinking process:

    ‘ wide analysis of all areas of spending … ‘

    The key word here is:

    SPENDING.

    Hiring talent that can generate millions in revenue my dear friend, is INVESTING not SPENDING.

    Hence the fatal flaw of most H.R. departments: Tbey analyze the expense column with NO TIE-IN to the RETURN COLUMN!!

    Not one of any of the candidates we’ve ever positioned could be interpreted as an EXPENSE.

    In the property and casualty insurance sector we serve, the lowest level trainee we placed during December, 2005 turned out to generate $1.2 MILLION dollars of additional revenue by January/2007 last year.

    Show me John, where in the stock market you can invest a small fee, bring somone on board (yes you must pay salary and put through training but the training program was already in place) and get more than a million in added revenue which is an extraordinary return?

    Higher level individuals we place accomplish even more.

    INVESTMENT, John. INVESTMENT is the KEY WORD.

  18. If the intention is to create a true business relationship (partnership) between a recruiting organization and the hiring company it is essential that the contract between these parties is mutually beneficial. If one party has advantage over the other this relationship will be short-term at best. Contracts should be designed to identify, clarify or remove potential issues that could negatively affect the relationship, and then act as a point of reference should disagreements occur.

    I am actually thankful when potential clients reveal their non-cooperative orientation by attempting to significantly alter / create a contract that would give them ?advantage? over us. While disappointing, I much prefer to see this ?red flag? at the outset. It helps us to avoid a ?relationship? that was doomed from the start, and saves us substantial time, money and frustration.

    There is nothing better than recruiting in the right way for the right client. Trust and mutual respect, reflected in an appropriate contract, will help to create a business relationship where everyone wins.

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